Crown Currency Exchange Collapse a Reminder of Need for Segregated Accounts

The plight of clients who stand to lose large amounts of money given over to the collapsed Crown Currency Exchange provides a harsh reminder that a key baseline requirement for considering any foreign exchange transfer company must be that customer funds be held in segregated accounts that are separate from the funds of the FX company itself. That way, client funds are protected from creditors of the FX company, which means you the client can get your money back instead of suffering the fate of some of the people in the BBC news account, who seem to be destined to lose an amount large enough to buy a house.

A perusal of the websites of various FX dealers reviewed in my initial post on the subject shows that many do claim they segregate client funds but some seem to make no mention of the subject, which probably means they do not. Here is what I found:

• CustomHouse - no information on how client funds are held
  
• XE Trade - no info
• Canadian/UK/NZ/Oz Forex - funds in segregated accounts; Barclays, Bank of Montreal, TDCanada Trust
• HiFX - segregated in Barclays, Bank of Montreal
• TorFX - funds in Barclays
• MoneyCorp - funds in account of clearing banks HSBC, Barclays or RBS
• WorldFirst - funds segregated, bank not specified
• CurrenciesDirect - no info
• Currency Solutions - funds held in “major UK banks”
• Interchange - use of own solicitor's account optional
• FirstRateFX - “specially designated” Barclays account

If you are transferring large amounts of money, don't take my word for it. Check that they actually do it e.g. by verifying with the regulatory body the FSA in the UK, or asking for a contact at the bank where the funds go.